Goldman Tightens Marcus Lending Reins

Goldman Sachs might be reining in its online lending platform due to concerns about the stage of the credit cycle and changes in market data.

Bloomberg cited sources that claim the company’s Marcus unit has slashed its loan originations target for next year. The news comes as a bit of surprise, given that earlier this year, it was revealed that Marcus had issued $3 billion in new consumer loans since launching in October of 2016 through the first quarter of 2018.

“We are pleased with the progress we are making on strategic initiatives within our consumer franchise,” Goldman CFO Martin Chavez said at the time. “Our long-term vision for Marcus is to create the leading platform for millions of consumers to take control of their financial lives.”

Then in August, the company launched Marcus in the U.K., reportedly offering the highest savings account interest rate in the country to lure new customers its way. Initially, Marcus will start by providing easy access, online-only savings accounts, with lending products slated to be available at the earliest in 2019. According to the memo that announced the rollout to staff, Goldman said it’s “an important milestone in the growth of Goldman Sachs’ consumer business, as well as continued diversification of the firm’s funding.”

There have also been reports that Germany will be the next country in Europe to gain access to Marcus.

According to the sources, the change in 2019 plans is due to current market conditions for consumer lending and could change. Some lenders are worried about the chance for increased losses in consumer credit as interest rates rise. In addition, total household debt for the U.S. hit $13.15 trillion in the fourth quarter ending in December, which is a $193 billion increase from the third quarter. The loss rate on the Marcus loan portfolio was around 5 percent, Chavez said in July.

A spokesman for Goldman Sachs declined to comment on the report.


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